GOOD PROFIT: Hedged nifty positions with straddle...

how do you find this strategy....


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linkon7

Well-Known Member
Can you please explain how is the loss of 300 calculated in the table and profit of 6 calculated (last line of the post)
I shorted 2 lots each of 4400 put august and 4400 call aug. The cost price is 400 and the current price is 406, hence a loss of 600.
The profit of 6 that you see is (6) meaning -6...
 

linkon7

Well-Known Member
While going through the option chain I noticed that the difference between LTP and Offer is large and also in the next image I wanted to know why there is difference between the close on LTP for index futures.

One other thing, when buying call how do you choose the strike price? rather why do you choose a particular strike price?
The difference is attributed to the last minute settlements.

I choose a strike price of the next month that is closest to the LTP. Normally i initiate this strategy on the 20th so that by the time the next month's options see roll over, i get at least 100 points as profit.
 

linkon7

Well-Known Member
Hi Linkon:

This is excellant... Thanks for sharing this stretegy.. It is certainly an interesting game plan, but then it gets challenging to execute with so many trades being done on future -- it will require one to be full time in front of screen to profit from this stretegy? is that correct understanding?

Cheers,

Heems
Its advisable to be near the screen if you plan to make money out of this strategy. If there is a chance of a gap up or down near the strike price, then you have to quickly maneuver your positions to make up for the losses. Incase, the LTP is far away from the strike price, then, you can afford to sit idle and watch your profit grow.
 

heeemz

Active Member
Its advisable to be near the screen if you plan to make money out of this strategy. If there is a chance of a gap up or down near the strike price, then you have to quickly maneuver your positions to make up for the losses. Incase, the LTP is far away from the strike price, then, you can afford to sit idle and watch your profit grow.
Linkon: Thanks for explanation, if I understood it correctly then one needs to be near to screen at market open, on the days while it is near to strike price, else we can safely sit idle...

I guess I would like to soon start paper trading this strategy to begin with...
Cheers,

Heems
 

linkon7

Well-Known Member
CUES--

--Nifty July future discount converted into premium of 6 points so cost of carry increased.
--Nifty open interest increased by 2 lacs suggests long addtion. (Total OI now at 2.40cr)
--Nifty calls shed 12 lacs and puts added 47 lacs in open interest.
--Nifty open interest put-call ratio is at 1.16.
--4300 puts had open interest of 47 lacs and 4700 calls had open interest of 37 lacs, so 4300 and 4700 will be important levels to watch for.
--India VIX closed at 35.89, decreased by 4% suggests stability.
 

Xaero

Active Member
CUES--

--Nifty July future discount converted into premium of 6 points so cost of carry increased.
--Nifty open interest increased by 2 lacs suggests long addtion. (Total OI now at 2.40cr)
--Nifty calls shed 12 lacs and puts added 47 lacs in open interest.
--Nifty open interest put-call ratio is at 1.16.
--4300 puts had open interest of 47 lacs and 4700 calls had open interest of 37 lacs, so 4300 and 4700 will be important levels to watch for.
--India VIX closed at 35.89, decreased by 4% suggests stability.
Too hi-fi...

Where did you learn all this? Rather where can I learn all this? I'm find it hard to understand your explanation itself let alone the strategy :lol:
 

Xaero

Active Member
Could you clarify somethin for me.

Can you place stop loss for options like you do for stocks?
I have the order form as shown below.

I have the June 4500 call selected. Now if I wanted to place a SL for the 4500 ce I can just place a trigger price and leave the price field empty to place a SL (the screenie is of buy but I know I will need to do it in sell form).

Another question is on my terminal it shows that the %chg for the 4500CE is 70%+ prev close 56.9 and LTP 96 odd does that mean:
if I had bought the 4500CE on friday I would have to pay 2845/lot and could sell it now for Rs.4800? That would be a 70% profit before costs, right?
 

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linkon7

Well-Known Member
scrip cost present diff profit/loss
4400 CE 200.00 246.00 (46.00) (4,600.00)
4400 PE 200.00 158.50 41.50 4,150.00
Nifty Futures 4,475.00 4,480.00 5.00 500.00


Total = 50.00


The position of the nifty straddle as of end of 20th July’2009

Script
4400 CE shorted at 200 has a current price of Rs. 246 is at a loss of Rs. -4600
4400 PE shorted at 200 has a current price of Rs. 158.5 is at a profit of Rs.4150
Nifty Futures long Innitiated at the averaged price of 4475 has a current price of Rs. 4480 is at a profit of Rs.500

Total = profit of Rs. 50

Statistics


Cost of the straddle = 400.00
present price of the straddle = 404.50
Actual value of the straddle = (80.00)
profit on straddle = (4.50)
Profit on nifty = 5.00

total profit = 0.50
 
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linkon7

Well-Known Member
Activity Today :
Market gapped up…and opened strong. didnt want to innitiate a trade in the first 15 min…
it went to as high at 4454… and then profit booking started.
Made a new low (pivot low) of 4407.
Entered long at 4422 and placed a sl at 4424 ( my break even)
Placed a short trigger at 4407….
The straddle is volatile but the total remains at 400 plus / minus 10
Nifty is facing selling pressure at 4430 to 4438 levels
sl triggered and got executed at 4422.5
market whipsawing between 20-32
bought NF at 4434
NF made a new pivot high at 4476
trailed NF to 4467… got hit
placed buy trigger at 4469…. Got hit
net connection down… placed sl at 45…over phone..placed long trigger at pivot high (76)
connection came back… long got triggered in at 76…
big mess up…
NF sl hit at 4480….
I better shift to higher straddle. Market looks strong….
covered 4400 put at 158.5
covered 4400 call aug at 246
sold 4500 aug put at 205
sold 4500 aug call at 190
bought NF at 4507
bought 4400 jul put at 59 as hedge for NF
 

linkon7

Well-Known Member
scrip cost present diff profit/loss
4500 CE (Aug) 190.00 205.00 (15.00) (1,500.00)
4500 PE (Aug) 205.00 194.00 11.00 1,100.00
Nifty Futures 4,507.00 4,505.00 (2.00) (200.00)
4400 put (july) as hedge 59.00 58.00 (1.00) (100.00)

Total = (700.00)


The position of the nifty straddle as of end of 20th July’2009

Script
4500 CE (Aug) shorted at 190 has a current price of Rs. 205 is at a loss of Rs. -1500
4500 PE (Aug) shorted at 205 has a current price of Rs. 194 is at a profit of Rs.1100
Nifty Futures long Initiated at the averaged price of 4507 has a current price of Rs. 4505 is at a profit of Rs.-200

Total = loss of Rs. -700

Statistics

Cost of the straddle = 395.00
present price of the straddle = 399.00
Actual value of the straddle = (105.00)
profit on straddle = (4.00)
Profit on nifty = (2.00)
loss on Hedge = (1.00)

total profit = (7.00)
 
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